News Release

The World Economic Forum’s The Russia Competitiveness Report recognizes Russia’s growth
potential can match the other BRICs while acknowledging the country is
currently falling behind India, China and Brazil in terms of competitiveness

Vienna,
Austria, 6 June 2011 – The Russian Federation has been falling behind other
large emerging BRIC economies, China, India and Brazil as productivity has been
stagnating. However, the country has the potential to grow at similar levels to
the other BRICs, provided it takes policy action to raise competitiveness,
according to The Russia Competitiveness
Report 2011, which was produced by the World Economic Forum in
collaboration with Sberbank and Strategy Partners Group. The report was
launched today in Vienna during the lead up to the World Economic Forum on
Europe and Central Asia, 8-9 June.

Over the past
year, Russia has seen a negative trend in its competitiveness performance. The
country’s productivity has been stagnating due to a number of shortcomings in
the country’s business environment. Russia’s three key assets, the educated
workforce, natural resources, favourable geographical location combined with an
important market size could thus not be capitalized upon.

Going forward,
the country will have to address five key challenges to raise productivity: (1)
institutions will have to be upgraded and the rule of law must be strengthened;
(2) improving the quality of education will be important for maintaining
Russia’s human capital advantage (3) more intense competition and the fostering
of entrepreneurship would significantly benefit the Russian economy; (4)
continued strengthening of the resilience of financial markets and facilitating
access to finance for business are key to economic growth; and (5) business
sophistication will grow in importance in the future, as the country moves away
from natural resources, so mechanisms to transfer knowledge and experience in
this field need to be considered.

The special
focus of this report is on innovation. A comprehensive national innovation
framework should take into account short-term issues such as more focus on
technological upgrading and not neglect long-term challenges such as support
for innovative SMEs and higher public expenditure on R&D. This would enable
the country to further tap into its innovative potential, which is based to a
large extent on the availability of human capital and strong R&D
capacities.

“As an optimist, I believe in Russia’s future economic successes.
I think that this nation has vast economic potential, and I do not see any
objective fundamental barriers hindering its development. What is needed here
are timely and well-planned efforts by the government and the business
community,” said Herman Gref, Chairman of the Board and Chief Executive Officer,
Sberbank.

“This report is a contribution to understanding the key factors
determining prosperity and economic growth in the Russian Federation,
benchmarking it against other countries that have been more successful in
raising income levels and providing economic opportunities for their respective
populations. It offers Russian policy-makers and business leaders an important
tool in the formulation of improved economic policies and institutional reforms,”
said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum.

Alexey
Prazdnichnykh, LLC Strategy Partners, Russian Federation, and co-editor of the
report said, “Creating new highly productive jobs in tradable industries and
attracting competence-based FDI should be targeted as goals and desired
outcomes of the new pro-competitiveness policy agenda for Russia. Moving
towards these aims would enable the country to achieve simultaneous progress on
economic and social aspects of development in a natural manner.”

“Russia could grow at a pace similar to the other BRIC economies
but challenges across a number of areas of economic policy keep the country
from realizing this considerable potential,” said Margareta Drzeniek Hanouz,
Senior Economist and Director, Centre for Global Competitiveness and
Performance, World Economic Forum, and co-editor of the report. “Major efforts
to reform the institutions and finalization of the WTO negotiations are key
priorities and would send important signals to the international community that
Russia is moving in the right direction.”

“Russia's
economy has huge potential, but far-reaching reforms are required to strengthen
institutions and foster innovation. The
Russia Competitiveness Report will help policy-makers and business leaders
alike to better address the challenges and capitalize on the opportunities of
the new Russian reality,” said Stephen Kinnock, Director, Head of Europe and
Central Asia, World Economic Forum.

The Russia
Competitiveness Report’s analysis is based on the Global Competitiveness Index (GCI),
developed for the World Economic Forum by Xavier Sala-i-Martin and introduced
in 2004. The GCI, the core methodology of the Global Competitiveness Report, is based on 12 pillars of
competitiveness, providing a comprehensive picture of the competitiveness
landscape in countries around the world at all stages of development. The
pillars are institutions, infrastructure, macroeconomic environment, health and
primary education, higher education and training, goods market efficiency,
labour market efficiency, financial market development, technological
readiness, market size, business sophistication and innovation.

The rankings are calculated from both publicly available data and
the Executive Opinion Survey, a comprehensive annual survey conducted by the
World Economic Forum together with its network of Partner
Institutes (leading research institutes and business organizations) in the
countries covered by the study. This year, over 13,500 business leaders were
polled in 139 economies. The survey is designed to capture a broad range of
factors affecting an economy’s business climate. The report also includes
comprehensive listings of the main strengths and weaknesses of countries,
making it possible to identify key priorities for policy reform.

The report contains an extensive data section with a detailed
profile for Russia and 26 emerging and developed economies, providing a
comprehensive summary of the overall position in the rankings and a comparison
with Russia for each of the indicators.

The English version of The
Russia Competitiveness Report 2011 is released on the occasion of the World
Economic Forum on Europe and Central Asia, while the Russian version will be
launched during a dedicated session at the St Petersburg International Economic
Forum on 17 June.

The World Economic Forum is an international institution committed to improving the state of the world through public-private cooperation in the spirit of global citizenship. It engages with business, political, academic and other leaders of society to shape global, regional and industry agendas.

Incorporated as a not-for-profit foundation in 1971 and headquartered in Geneva, Switzerland, the Forum is independent, impartial and not tied to any interests. It cooperates closely with all leading international organizations (www.weforum.org).